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Spire Heathcare lifts revenue guidance despite Covid costs
9th Sep 2021 07:24
(Sharecast News) - Independent hospital group Spire Healthcare said it expected annual revenue to be "materially ahead" of 2019 as it swung to a half-year profit despite higher costs due to the Covid pandemic.
Spire said UK admissions in July and August had been impacted by a surge in the Delta variant of the virus which led to last minute cancellations as patients, staff and consultants were forced to self-isolate. Higher labour costs hit core earnings by an average £4m during the two months.
Pre-tax profit for the six months to June 30 came in at £4.7m compared with a £231m loss a year earlier, but still 51% lower than 2019 before the pandemic struck. Revenue rose 38.9% year on year to £558.2m.
Spire said it expected Covid-related costs to be offset by improvements in testing and progressive efficiency measures providing a platform for margin expansion in 2022.
"Given the positive underlying trends, we are confident 2021 revenue will be materially above 2019," the company added.
It also expects core earnings to recover from the July and August levels to trade in line with 2019 over the last four months of the year, assuming Covid cases do not rise materially.
"Should it do so, the operating impacts seen in July and August could prevail for the rest of the year," Spire said.
Chief executive Justin Ash said the company had seen "unprecedented" demand from private patients as National Health Services waiting lists climbed due to a backlog for routine treatments.
"We are of course experiencing material additional costs arising from the complexities of delivering safe care in a Covid-secure environment, which will continue as long as Covid case numbers remain high in the UK."
"However, we have successfully driven down the cost of COVID testing and our continued investment in digital systems and efficient pathways will deliver significant cost savings in 2022 and beyond."
Spire said UK admissions in July and August had been impacted by a surge in the Delta variant of the virus which led to last minute cancellations as patients, staff and consultants were forced to self-isolate. Higher labour costs hit core earnings by an average £4m during the two months.
Pre-tax profit for the six months to June 30 came in at £4.7m compared with a £231m loss a year earlier, but still 51% lower than 2019 before the pandemic struck. Revenue rose 38.9% year on year to £558.2m.
Spire said it expected Covid-related costs to be offset by improvements in testing and progressive efficiency measures providing a platform for margin expansion in 2022.
"Given the positive underlying trends, we are confident 2021 revenue will be materially above 2019," the company added.
It also expects core earnings to recover from the July and August levels to trade in line with 2019 over the last four months of the year, assuming Covid cases do not rise materially.
"Should it do so, the operating impacts seen in July and August could prevail for the rest of the year," Spire said.
Chief executive Justin Ash said the company had seen "unprecedented" demand from private patients as National Health Services waiting lists climbed due to a backlog for routine treatments.
"We are of course experiencing material additional costs arising from the complexities of delivering safe care in a Covid-secure environment, which will continue as long as Covid case numbers remain high in the UK."
"However, we have successfully driven down the cost of COVID testing and our continued investment in digital systems and efficient pathways will deliver significant cost savings in 2022 and beyond."